Groping With the Invisible Hand

While many people have expressed reservations about the direction of the Clinton economic program, the good economic news is that retail condom sales broke the $300 million dollar mark for 1993. Moreover, this robust figure does not include purchases for nonprofit distribution b entities such as public schools or the U.S. Navy. And, even had there been no NAFTS, the prospects for an export boom appear to be outstanding.

Ironically, this glowing success at the macroeconomic level masks a marked microeconomic failure in condom consumer education. Despite the best efforts of our schools and government, condom use among American teenagers is still reported to be distressingly low. Numerous surveys indicate that the vast majority of adolescent liaisons are taking place without the benefit of assistance from one of America’s fastest growing industries.

Because our future economic health will depend on the consumer choices made by the younger generation in this key industry sector, it is likely that our sex education programs will come under heightened scrutiny from government economic policy analysts in the near future. Naturally, all of us want to help in any way possible, and to that end I propose revising and enhancing the behavioral model that is at the core of modern sex education.

Any attempt at reform must begin with the realization that modern condom education is, in essence, an economic argument: the pleasures of sex have more net utility if the risks of adverse consequences are reduced. Therefore, if consumers are educated so as to be able to recognize and reduce risks, sex can be obtained at lower net cost with net benefits to society as a whole. In effect, we are training our teens to make the following calculation, such that sex is deemed appropriate when the following equation is satisfied:

S>P1 X L1 + . . . Pn X Ln (Eq. 1-1)

where S is the perceived value or pleasure of a contemplated sex act, P is the probability of occurrence of a particular adverse event, and L is the net economic loss accruing from the occurrence of any one of a series of enumerated possible adverse events (Sexually Transmitted Diseases [STDs], pregnancy, emotional distress, etc.). In theory, L is constant. Therefore, whenever P can be made to approach zero for each corresponding L, then the sex act under contemplation is the desired course of action.

In actual practice, this simplistic approach does not work for three reasons. First, the cumulative values of PL risk perceptions appear to have dropped substantially over the years. Informal survey data of PL dispositions of teenage boys collected by the author both in his former capacity as a high school teacher and as a systematic observer of both human and teen behavior indicate that the composition and composite value of PL values have indeed dropped since the selected 1968 base year. This trend contradicts popular perceptions and rhetoric concerning increased dangers related to unprotected sex.

The following table compares the author’s quantification of male PL values for his own teen peer group and that of a modern cohort (units are based on a uniform scale of one to ten in which 10 is the largest value):

Class

of

1968

Class

of

1994

Risk (P)

Loss (L)

P X L

Risk (P)

Loss (L)

P X L

AIDS

NA

NA

NA

0

10

0

Syphilis

2

8

16

1

3

3

Gonorrhea

3

7

21

3

2

6

Herpes

NA

NA

NA

3

4

12

Pregnancy

6

9

54

2

5

10

Loss of Peer Respect

3

3

9

NA

NA

NA

Parental Disclosure

6

7

42

3

3

9

Violence by Girl’s Father or Older Brother(s)

4

8

32

NA

NA

NA

Eternal Damnation

5

10

50

NA

NA

NA

Total PL

224

40

The comparative data suggest that an exclusively risk-oriented, microeconomic ( S>PL ) approach to sex education would likely have been more effective among teenage boys in 1968 than in 1994, given that the cumulative perceived PL values in that era were much higher. Arguably, the more prevalent religio-moral approach to sex education deployed in that era could also be described as a behavioral calculus in which the respective PL values just happened to be substantially higher.

Even the emergence of AIDS has not substantially altered the PL values for the modern cohort. AIDS is accurately perceived by exclusively heterosexual, non-drug-using teens as being of minimal risk. There is also a perception that effective antibiotic treatments exist for most other STDs. Pregnancy, once greatly feared by males, is now perceived as an exclusively female disorder for which abortion is a socially sanctioned remedy.

The second major reason why the S>PL approach fails is that it fails to take into account the perceived inconvenience cost or disutility of using condoms. The sexual choice calculation needs to be restated so as to include the disutility of condom deployment (C c ). This significantly complicates our analysis because C c will also be dependent on some but not all of the same variables by which we evaluate S. We can construct a more complete model of overall sexual utility ( U ) by including the perceived inconvenience costs of condom deployment as follows:

in which S, L, and P are used as defined previously, R is the perceived reduced risk rate as a result of condom deployment and C is condom use (on=1, not on=0). Using Roy’s identity, the choices of condom use and reduced risk that maximize U can be derived as:

It appears from the above equations that in a perceptual environment in which the inherent risks of sex are perceived to be decreasing and the benefits increasing, the relative inconvenience costs of condom deployment can become quite high. This suggests that if S>PL -based sex education has the overall effect of enhancing the perceived net utility of sexual intercourse, it may also have the ironic and unintended consequence of increasing the perceived inconvenience costs of using condoms. Even more discouraging for the pro-condom educational agenda is that this is a best-case scenario that assumes that teens’ behavior with respect to sexual choices will approximate rational market behavior, an assumption greatly open to question.

The third major flaw in the S>PL -based approach is that sex education theorists typically tend to be blind or even hostile to the concept of sexual economic utility or the instantaneous subjective value of sex. The failure to appreciate the concept of utility invariably leads to Soviet Central Planner’s Syndrome (SCPS). Indeed, the current failure of our national sex education agenda bears a striking analogy to the root causes for the fall of the Soviet Union.

The economic failure of Soviet Communism was almost entirely due to SCPS. For example, when a central planning agency set a fixed price for a ton of steel, this did not affect steel’s true market value to different users at different times. A tractor manufacturer may be willing to pay more for steel than an appliance maker because the latter can use cheaper metal substitutes and thus has a lower utility for the item. If a large and complex economy is not permitted to direct resources to where they are most highly valued, then it must inevitably fail.

In the same way, teens not only vary individually with respect to their marginal utility for sexual activity, individual teens manifest marked variances over strikingly short periods of time. A teenage boy who performs a risk-benefit analysis of a contemplated sex act at 11:00 a.m. while in the sex education classroom will likely reach an entirely different result when a virtually identical analysis is performed at 11:00 p.m. in the back seat of a spacious, American-made car produced by the now-resurgent and highly competitive U.S. automobile industry.

Under the latter conditions S (utility of the contemplated sex act) increases exponentially while the perception of P (risk probability) may diminish substantially, even if L (loss) is perceived to remain constant. In the same way that Soviet central planners could never set the right price for steel, sex educators can never hope to establish fixed values for the condom risk-benefit equation using a simplistic model. The Invisible Hand can be constrained neither by visual aids nor latex.

Rather than treat S as a constant value, we must recognize that teen sexual utility is a function of several variables as expressed in equation 3-1 below:

S = S(H1, H2, . . . Hn) (Eq. 3-1)

in which the various H -factors are variables such as the mean base hormonal status of the individual, beer-equivalent unit consumption, the beer-equivalent unit consumption of the other party to the contemplated sex act, and logistical circumstance factors such as location, proximity of potential observers, music, weather conditions, time of day, and the perceived degree of consensual opportunity.

Typically, sex educators mistake the mean value of hormonal predisposition ( H1 ) for S , when in reality S is a more complex function subject to a great number of other exogenous variables.

This points to another significant difference between the 1968 and 1994 cohorts. Although the mean value of H1 (hormonal predisposition) for a random sample of boys in both cohorts would very likely prove to be identical, anecdotal data suggests that virtually all other H factors tend to be higher on average at the present time.

The older, religio-moral paradigm of sex education actually served to reduce H values under the rubrics of avoiding occasions of sin, self-respect, responsibility, etc. In addition, social organizations and families often acted to reduce greatly the logistical circumstance factors. This organized behavior, combined with the much higher PL values of that era, served to greatly reduce actual outbreaks of teen sexual activity.

However, a more striking difference between the sex education of the 1968 and the 1994 cohorts is that the objective of the earlier education program appeared to be to minimize the actual occurrence of sexual acts whereas the dominant present objective is to insure that sex acts only take place when the S>PL equation is satisfied.

We must face up to the reality that even if American teens had the reasoning and math skills necessary to adequately and accurately perform S>PL pre-sex analysis, such analysis may result in a net disutility for regular condom use. Therefore, in order to preserve the macroeconomic benefits of widespread condom retail sales, a more radical pro-condom approach is called for, one that combines the net risk reduction effects of the religio-moral education paradigm while still preserving the macroeconomic benefits of widespread retail condom purchases.

Perhaps surprisingly, the only model that meets both requirements would be one that (1) requires mandatory, periodical condom purchase by teens; and (2) relies on a sex education paradigm that stresses absolute abstinence until an age of financial and personal maturity as expressed in equation 4-1:

S = 0 (Eq. 4-1)

Some may argue that this is contradictory: Why require condom purchases by persons who are simultaneously being instructed never to deploy them? In this respect, the condom purchase requirement under the proposed new sex ed paradigm parallels what was known in the older religio-moral paradigm as rendering unto Caesar. Moreover there are substantial historical precedents for purchase and storage of condoms that will never be used. An estimated 45 percent of all men’s wallets manufactured between 1957 and 1970 were put to use in this precise fashion for their entire useful lives, a consumer application that was unaffected by the decline of the domestic leather goods industry during that period with its subsequent adverse impact on the balance of trade.

The more significant criticism of the revised paradigm is that an S = 0 approach is an unrealistic denial of the inherently high utility of teen sexual intercourse. However, as we have seen S is the result of a number of exogenous variables, not the least of which is the role of adults in minimizing socially constructed H factors. Or, to put it in terms of the old religio-moral paradigm, adults would be required to set an example, resist hypocrisy, and actively intervene to discourage teen sex.

Reliance on PL values under the present approach sends the desired message that life largely consists of adversity risks against which the autonomous individual in pursuit of enjoyment must struggle armed only with reason and data. In contrast, an educational approach that focuses on H value components of S implies that just as adults have a vested interest in teen behavior, teens will themselves be entrusted with the well-being of the next generation. While this latter message may run counter to educational efforts to promote individualism and self-esteem, the perception that there is a long-term bond between generations may make transmittal of this and other constructive educational messages easier to effect.

This new approach runs an enormous risk of accentuating the link between sex and reproduction as well as the danger of instilling community values in the individual teen. This would, of course, be a formidable price to pay; but if it reduces the drag on the GNP from the external costs of sexual misadventure and helps create American jobs, we may be forced to consider it in light of the economic alternatives.